Docket: 2005-240(IT)G
BETWEEN:
YVON LAPLANTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
____________________________________________________________________
Appeals heard on October 13, 2006, at
Québec, Quebec.
Before: The Honourable Justice Louise Lamarre Proulx
Appearances:
|
For the Appellant:
|
The Appellant himself
|
|
Counsel for the Respondent:
|
Simon-Nicolas Crépin
|
____________________________________________________________________
JUDGMENT
The appeals from the
assessments made under the Income Tax Act for the 1999 and 2000 taxation
years are dismissed, with costs, in accordance with the attached Reasons for
Judgment.
Signed at Ottawa, Canada, this 17th day of January 2007.
"Louise Lamarre
Proulx"
Translation
certified true
on this 1st day of
August 2007.
Brian McCordick,
Translator
Citation: 2007TCC24
Date: 20070117
Docket: 2005-240(IT)G
BETWEEN:
YVON LAPLANTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] These appeals pertain to the 1999 and 2000
taxation years.
[2] $20,413 and $24,838 in unreported income was
added to the Appellant's income for the taxation years in issue. Penalties
under subsection 163(2) of the Income Tax Act ("the
Act") were imposed on $14,317.08 in 1999, and $24,469.17 in 2000.
[3] The issue is whether the Minister of National
Revenue ("the Minister") properly included, in computing the
Appellant's income for each of the years in issue, the additional amounts
referred to above.
[4] The facts on which the Minister relied in making
his reassessments are set out in paragraph 9 of the Reply to the Notice of
Appeal:
[TRANSLATION]
9. In making the reassessments for the 1999
and 2000 taxation year and confirming the points concerning the additional
income, the Minister took the same facts into account, namely:
(a) The Appellant is a contractor-electrician
and operates his business under the name Yvon Laplante Enr.
(b) During an audit of the years in issue,
several unexplained deposits into the Appellant's personal bank accounts were
identified.
(c) The business' account number at the Bank
of Nova Scotia is 10041 00320 18.
(d) The Appellant has two personal bank accounts:
account #10041 06656 22 at Scotiabank, and account #29051 at the
Caisse populaire de Beauport.
(e) Several times during the audit, the
Appellant's wife said that she deposited customers' cheques into the
Appellant's personal accounts and hers.
(f) The Appellant's explanations regarding
these deposits are not supported by any documentary evidence.
(g) These amounts, which were deposited into
the Appellant's bank accounts, are actually unreported income from the
operation of his business and were appropriated by being deposited into his
personal bank account.
(h) On April 1, 2003, the Appellant signed a form
in which he waived the application of the reassessment period for the 1999
taxation year.
10. By imposing penalties for the 1999 and 2000
taxation years, the Minister relied on the same assumptions of fact, that
is to say:
(i) The facts set out in subparagraphs (a) to
(h) of this Reply to the Notice of Appeal.
[5] The Notice of Appeal explains the source of the
additional amounts as follows:
[TRANSLATION]
. . .
In my opinion, these amounts represent deposits from withdrawals
made under the name Diane Fournier and transfer [sic] from the
personal account . . .
[6] The unexplained deposits into the personal bank
accounts are described in Exhibit I‑1, volume 2, tab 5. They
are cash deposits.
[7] Diane Fournier is the Appellant's wife. The
Appellant is a contractor‑electrician. He has been engaged in this
occupation since 1984. Ms. Fournier does the bookkeeping for the business.
Each month, she submits the books to Jean‑Pierre Hardy, the
business's external accountant.
[8] During her
testimony, Ms. Fournier tried to explain the source of the unexplained
deposits. She spoke about the
repayment of a loan that had been made to her sister; deposits of cash amounts
that were withdrawn upon cashing cheques that her husband's business had issued
to her; and deposits of cash rent payments in respect of their rental
properties.
[9] At page 118 of the transcript,
Kathleen Drew, the auditor, explains the extent to which the Appellant
cooperated with her:
[TRANSLATION]
[544] Q. … What was the nature of your first contact with the
Appellant [September 2002]?
R. He simply referred me to Mr. Hardy, his accountant.
[545] Q. Okay. Ms. Drew, could you please describe to the
Court the sort of cooperation that Mr. Hardy or Mr. Laplante provided in terms
of obtaining information throughout the audit?
R. It took a long time. I had trouble obtaining
documents. There were delays on top of delays. It was like a game of hot potato
between Mr. Laplante and Mr. Hardy. I only obtained the documents in
January 2003.
[10] The auditor states
that, during the audit, she asked Ms. Fournier about personal loans, and she
replied that there were none.
[11] As for the
explanation regarding cash rental payments, the auditor found that there would
have to be far more rental income than that reported on the income tax return.
The discrepancy would amount to $9,000.
[12] As far as the
cheques issued by the business to Ms. Fournier are concerned, the auditor
found that the full amounts thereof were deposited into the personal bank
account and that there were no cash withdrawals.
[13] The appeals officer
also discussed the difficulties and the lengthy waits for answers.
Analysis and conclusion
[14] The Respondent
submits that the only plausible source of unexplained deposits is income from
the business.
[15] It would be
difficult for me to come to any other conclusion. The explanations
provided by Ms. Fournier, the Appellant's wife, with respect to the
unexplained cash deposits into the personal accounts, are not at all
persuasive. They are not supported by evidence. During the audit phase, no
mention was made of any loan repayment by a relative. No witnesses came to
corroborate the assertion on this subject at the hearing. As for the
argument regarding the rental income, it is not valid because it would require
the rental income to be higher than the reported amount. The business's
accountant rejected the argument during the appeals phase. The explanation
alleging that cash withdrawals were made upon cashing cheques issued by the
business to Ms. Fournier, and that the amounts thereby withdrawn were then
deposited into the accounts in dispute, cannot be accepted either, since there
is no evidence of cash withdrawals from the accounts into which the cheques
were deposited.
[16] Consequently, the
appeals are dismissed, with costs. However, as the Respondent noted in the
Reply to the Notice of Appeal, the aggregate of all amounts in issue is less
than $50,000, and therefore, the proceedings should be considered Class A
proceedings, not Class B proceedings.
Signed at Ottawa, Canada, this 17th day of January 2007.
"Louise Lamarre Proulx"
Translation
certified true
on this 1st day of
August 2007.
Brian McCordick,
Translator
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